Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is entered into as of March 16,
1999, (the "EFFECTIVE DATE") by and between SmartDisk Corporation, a Delaware
corporation ("COMPANY") and Xxxxxx Xxxxxxxxx ("EMPLOYEE").
1. EMPLOYMENT RELATIONSHIP.
1.1 COMMENCEMENT AND TERM OF EMPLOYMENT. The Company employs
Employee and Employee accepts employment by the Company as of the Effective Date
on the terms and conditions set forth in this Agreement. The term of employment
("TERM OF EMPLOYMENT") shall commence as of the Effective Date and shall
continue thereafter for a period of thirty-six (36) months unless sooner
terminated pursuant to Section 5.
1.2 DUTIES. During the Term of Employment, Employee shall have
the title and perform and faithfully discharge the duties and responsibilities
of Senior Vice President, Development and Engineering of the Company. Employee
shall use his best efforts to perform and discharge such duties and
responsibilities in such manner as the Company's Board of Directors or President
and Chief Executive Officer may reasonably prescribe to Employee from time to
time. Employee shall also use his best efforts to observe all policies,
procedures and other requirements not inconsistent with this Agreement that may
be implemented or revised by the Company during the Term of Employment.
1.3 COMMITMENT OF EMPLOYEE. Employee shall devote
substantially all of his productive business time, attention, knowledge and
skill exclusively to the performance of his duties hereunder throughout the Term
of Employment and shall at all times discharge his duties faithfully,
industriously and to the best of his ability, experience and talents.
2. COMPENSATION.
2.1 SALARY. For all of Employee's services during the Term of
Employment, Employee shall be paid a salary of One Hundred Eighty Thousand
Dollars ($180,000.00) per year ("BASE SALARY"). Employee shall be eligible for
merit increases in salary after the first anniversary of the Effective Date of
this Agreement, as determined by the Compensation Committee of the Company's
Board of Directors (the "COMPENSATION COMMITTEE"). Payment shall be made in
periodic installments in accordance with Company's payroll policies instituted
from time to time. Upon termination of this Agreement pursuant to Section 5, the
Company shall have no obligation to pay salary or other benefits to Employee
except as may be provided in Section 5.
2.2 BONUS. Employee shall be entitled to an annual bonus
("BONUS"). Upon attainment of one hundred percent (100%) of the bonus
objectives, Employee shall be entitled to a Bonus in calendar year 1999 of Sixty
Thousand Dollars ($60,000.00). Each year the parties shall agree on a mutually
acceptable Bonus objectives. Said Bonus shall be payable on the dates
established by the Company for payment of annual bonuses and shall be payable
only if Employee continues to remain in the employ of the Company on such date.
SmartDisk Corporation
Employment Agreement
Page 2
2.3 EMPLOYEE BENEFITS. During the Term of Employment, Employee
shall be entitled to participate in the group medical, dental and disability
policies and other benefits maintained from time to time by the Company for the
benefit of senior officers of the Company. During the Term of Employment,
Employee shall be entitled to receive all other benefits, and to participate in
all other benefit plans, as are generally available to employees of the Company
on the same terms as other senior management employees. Employee shall be
entitled to reimbursement for all usual and customary business expenses in
reasonable amount incurred by Employee in the performance of his duties for the
Company in accordance with the Company's then current expense reimbursement
policies and guidelines.
2.4 RELOCATION AND OTHER ASSISTANCE. Employee shall be
reimbursed by Company up to a maximum amount of Forty Thousand Dollars
($40,000.00) for relocation costs all of which are set forth on EXHIBIT A.
2.5 STOCK OPTIONS. The Company shall recommend to the
Compensation Committee that Employee receive an incentive stock option in the
form attached as EXHIBIT B (the "OPTION") pursuant to which Employee shall be
entitled to purchase one hundred sixty thousand (160,000) shares of the
Company's Common Stock at an exercise price equal to the fair market value of
the Company's Common Stock on the date of the grant, which the Company
anticipates will be $1.20 per share, and shall vest twenty-five percent (25%)
one year after the Effective Date and then in twelve equal quarterly
installments, all as more fully provided in the Initial Option. To the extent
that the Option grant cannot be an incentive stock option, the balance of such
grant shall be a non-statutory option.
2.6 LOAN. The Company will extend to Employee a loan of Sixty
Thousand Dollars ($60,000). The loan will be evidenced by a Promissory Note in
the form attached hereto as EXHIBIT C.
3. VACATIONS. During the Term of Employment, Employee shall be entitled
to fifteen (15) days of paid vacation per year. In no event shall Employee be
entitled to accrue and carry forward more than five (5) days of paid vacation
from any calendar year to another, and if Employee has reached this total, no
further vacation days shall accrue until the total of accrued but unused
vacation days falls below such maximum.
4. PLACE OF BUSINESS. During the Term of Employment, Employee shall
render services hereunder at the Company's principal executive offices in
Naples, Florida, or any successor principal office. Employee shall also be
available to travel for business purposes incident to the performance of his
duties, as required from time to time. Transportation, lodging and meal expenses
shall be incurred and reimbursed in accordance with the general policy of the
Company as adopted by the Company from time to time.
5. EARLY TERMINATION.
5.1 TERMINATION UPON PERMANENT DISABILITY OR DEATH. This
Agreement shall automatically terminate upon the permanent disability or death
of Employee, subject to the obligation of the Company to pay Employee or
Employee's personal representative or designated beneficiary, as the case may
be, (i) the balance of Employee's Base Salary and other benefits for the
remainder of the month in which disability or death occurs, (ii) a pro rata
portion of any Bonus to which Employee was otherwise entitled under Section 2.2
based upon the ratio the number of months employed for the year in question
(calculated through the end of the then current month) bears to the bonus period
of twelve (12) months and
SmartDisk Corporation
Employment Agreement
Page 3
(iii) any other disability benefits described in this Section 5.1 to which
Employee may be entitled. The Company will continue to pay Employee his regular
Base Salary during any period during which Employee is incapable of continuing
the further performance of Employee's normal employment activities with the
Company because of a mental, emotional or physical injury, sickness or disorder.
However, when such period exceeds an aggregate of sixty (60) business days
(exclusive of any accrued vacation within the limits set forth above) out of any
three hundred sixty-five (365) consecutive calendar days, Employee shall be
deemed permanently disabled. Employee shall also be deemed permanently disabled
if so certified by any two physicians, or upon the expiration of any elimination
period under any disability insurance policy purchased by the Company for the
benefit of Employee. Should Employee become permanently disabled, Employee or
his personal representative shall be entitled to receive his termination
compensation, as well as any disability benefits maintained for Employee by the
Company, if any, pursuant to the terms and subject to the conditions of any such
applicable disability benefit program or policy.
5.2 TERMINATION FOR CAUSE. During the Term of Employment, the
Company may at any time, without giving notice to Employee, immediately
terminate this Agreement for Cause. As used herein, "Cause" shall mean if
Employee (a) commits any act of embezzlement, theft, fraud or dishonesty; (b)
engages in unfair competition with the Company or any subsidiary of the Company
whether or not wholly-owned; (c) is convicted of any felony; (d) breaches any
material provision of the Confidentiality Agreement entered into by Employee
pursuant to Section 6 of this Agreement; (e) uses illegal drugs or abuses other
substances or (f) willfully breaches any other material provision of this
Agreement. The Company may also terminate Employee for "Cause" if Employee
materially breaches or habitually neglects or fails in any material way to
perform the usual and customary duties of his job, or any other duties required
to be performed under the terms of this Agreement, or the policies of the
Company, in which case the Company may, at its option, terminate this Agreement
by giving written notice of termination to Employee. Any termination pursuant to
either of the two preceding sentences shall be without prejudice to any other
remedy to which the Company may be entitled either at law, in equity, or under
this Agreement. Before the Company may terminate this Agreement by reason of
Employee's habitual neglect of or failure to perform the usual and customary
duties of his job or policies of the Company, the Company must first notify
Employee in writing, setting forth in detail those duties and/or policies which
Employee has habitually neglected or failed to perform, and provide Employee a
reasonable period of time, not to exceed thirty (30) days, in which to cure such
neglect or failure. If Employee does not cure the specified areas of neglect of
failure, the Company may terminate this Agreement immediately by giving Employee
written notice. At the time of any termination for Cause, Employee shall be
entitled to receive any Base Salary and employment benefits which shall have
accrued prior to the date of termination, but shall not be entitled to any Bonus
or severance payments, salary or employment benefits relating to periods
subsequent to the date of termination, subject to Employee's rights to continue
medical and dental coverage under the Company's group policy, at Employee's
expense, as may be provided by law.
5.3 TERMINATION BY EMPLOYEE. This Agreement may be terminated
by Employee for any reason, or no reason, by giving thirty (30) days' written
notice of termination to the Company. Upon termination by Employee, all rights
accruing to Employee under the terms of this Agreement shall cease, and Employee
shall not be entitled to any Bonus or severance payments, Base Salary or
employment benefits, except to the extent earned and accrued prior to the
termination date, and subject to Employee's rights to continue medical and
dental coverage under the Company's group policy, at Employee's expense, as may
be provided by law.
SmartDisk Corporation
Employment Agreement
Page 4
5.4 TERMINATION WITHOUT CAUSE. Employee's employment with the
Company during the Term of Employment may be terminated by the Company at any
time without Cause, by the Company's giving fifteen (15) days prior written
notice. A termination without Cause, for purposes of this Agreement, means
termination by the Company other than as provided for in Sections 5.1 and 5.2.
5.5 SEVERANCE PAYMENTS. If Employee is terminated pursuant to
Section 5.4, Employee shall be entitled to severance pay in accordance with the
Company's normal payroll practices at the rate of Employee's Base Salary for
such year set forth in Section 2.1 for a period of six (6) months following
termination. All severance pay shall be payable in equal consecutive monthly
installments on the last day of each month following the effective date of
Employee's termination for the number of months of severance pay to which
Employee is entitled hereunder. Employee understands and agrees that such
payments shall be his only entitlement as and for severance pay or severance
compensation. Upon termination pursuant to Section 5.4, except for the severance
payments stated above, all rights and obligations accruing to Employee under the
terms of this Agreement or otherwise shall cease, and Employee shall not be
entitled to any further salary, bonus or employment benefits, except to the
extent earned and accrued prior to such date, and subject to Employee's rights
to continue medical and dental coverage under the Company's group policy, at
Employee's expense, as may be provided by law.
6. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Concurrently with the
execution and delivery of this Agreement, Employee agrees to enter into the
Company's Confidentiality Agreement for senior executive officers of the Company
in the form attached as EXHIBIT D (the "CONFIDENTIALITY AGREEMENT"). In the
event of any inconsistency between the terms and provisions of this Agreement
and those of the Confidentiality Agreement, the terms and provisions of this
Agreement shall prevail.
7. NON-COMPETITION.
7.1 AGREEMENT NOT TO COMPETE. Employee agrees that during the
Term of Employment and for the period thereafter specified in the next sentence,
Employee will not engage, directly or indirectly, either as principal, agent,
consultant, proprietor, stockholder, director, officer or Employee, or
participate in the ownership, management, operation or control of any other
business engaged in the type of business conducted by the Company. Such
agreement not to compete shall extend after the date of termination for any
reason for one year. This Section 7.1 shall not apply to Employee's ownership of
less than one percent (1%) of the capital stock of any corporation having a
class of capital stock which is traded on any national stock exchange or in the
over-the-counter market.
7.2 SOLICITATION. During the Term of Employment, and for the
period of one (1) year thereafter, Employee agrees that he will not, without the
Company's prior written consent, solicit or encourage any of the employees of
the Company or Xxxxxxx International Systems Corporation ("FISC") to leave the
employ of the Company or FISC, or terminate or alter their contractual
relationships in a way that is adverse to the Company's or FISC's interest or,
during the period of Employee's employment, solicit business from any customer
of the Company on behalf of any competitor of the Company.
SmartDisk Corporation
Employment Agreement
Page 5
8. MISCELLANEOUS.
8.1 GOVERNING LAWS. It is the intention of the parties hereto
that the internal laws of the State of Florida (irrespective of its choice of
law principles) shall govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties hereto.
8.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and
unless otherwise provided in, this Agreement, each and all of the covenants,
terms, provisions, and agreements contained herein shall be binding upon, and
inure to the benefit of, the permitted successors, executors, heirs,
representatives, administrators and assigns of the parties hereto. Employee may
not assign this Agreement or any of Employee's rights hereunder except as
provided herein or with the prior written consent of the Company.
8.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
8.4 ENTIRE AGREEMENT. This Agreement (together with the Option
and Confidentiality Agreement) constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements or understanding,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto and thereto.
8.5 AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof
shall not be deemed to constitute a waiver of any other default or any
succeeding breach or default.
8.6 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
8.7 NOTICES. Whenever any party hereto desires or is required
to give any notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States certified mail, postage prepaid,
addressed as follows:
Company: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000-0000
Attn: Chief Executive Officer
Employee: To the address set forth on the signature page hereof
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Employment Agreement
Page 6
Such communications shall be effective when they are received
by the addressee thereof; but if sent by certified mail in the manner set forth
above, they shall be effective no later than five (5) days after being deposited
in the United States mail. Any party may change its address for such
communications by giving notice thereof to the other party in conformity with
this Section.
8.8 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
8.9 INSURABLE INTEREST. Employee hereby grants to the Company
an insurable interest in Employee's life, and agrees and understands that the
Company may at any time or from time to time during the Term of Employment
choose to purchase and maintain key man life insurance on Employee.
8.10 EMPLOYEE'S REPRESENTATIONS. Employee represents and
warrants that he is free to enter into this Employment Agreement and to perform
each of the terms and covenants of it. Employee represents and warrants that he
is not restricted or prohibited, contractually or otherwise, from entering into
and performing this Employment Agreement, and that his execution and performance
of this Employment Agreement is not a violation or breach of any other agreement
between Employee and any other person or entity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove written.
EMPLOYEE'S ADDRESS FOR NOTICE: EMPLOYEE:
0000 XXXXXXXXXX XXXXXX
XXXXXX, XX 00000
/s/ XXXXXX XXXXXXXXX
------------------------------------
Xxxxxx Xxxxxxxxx
COMPANY:
SMARTDISK CORPORATION
By: /s/ XXXXXXX X. XXXXXXXXX
---------------------------
Its: PRESIDENT
SmartDisk Corporation
Employment Agreement
Page 7
EXHIBIT A
Relocation Assistance: Up to $40,000
- Relocation of household goods
- Closing costs and realtor's fees for sale of Employee's residence in Ohio
- House hunting travel and lodging expenses
- Other related expenses to purchasing a residence in Naples, Florida
